Medical Device Regulatory, Reimbursement and Compliance Congress - PowerPoint PPT Presentation

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Medical Device Regulatory, Reimbursement and Compliance Congress

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Title: Medical Device Regulatory, Reimbursement and Compliance Congress


1
Medical Device Regulatory, Reimbursement and
Compliance Congress
Value-Based Pricing The Good, The Bad, and The
Ugly
March 27, 2008
Randel E. Richner, BSN, MPH President, Founder
2
Reform
  • There is no problem, however difficult, which if
    we roll up our sleeves, we cannot completely
    ignore.
  • --George Carlin

3
Policy Overview
3
  • Technology Is Good.
  • Technology per se, does not cause increased
    health care costs
  • It is only randomly possible to accurately detect
    the true value of technology due to a fragmented
    care delivery, migration of services, and system
    issues (complex overlay of private/public
    insurers to track and monitor care and value).
    Misaligned payment systems may cause perverse
    care incentives and artificial determinants of
    value.
  • The calculation of risk in determining the
    threshold of value is largely ignored.

4
New, Innovative and Complex Technologies
4
  • Devices are getting smarter and are providing
    more information
  • Intelligent devices
  • Biotechnology Revolution
  • Personalized Medicine
  • Combination Products
  • Information-Rich Therapeutics

5
Typical Market Development
Early adopter Early Majority Late
majority

Prove Principle Drive Adoption
Change Standard
6
Innovation PTCA
7
  • Technology Assessment and Value

8
Technology Access
8
Decision-Making Occurs at Multiple Levels
Organizations Involved
  • CMS, (Global--International)
  • Major national third party payers and benefit
    managers
  • Medicare Intermediaries and Carriers, DMERCs
  • Regional health plans
  • Medicaid administrators
  • IDNs
  • Physician groups
  • Hospitals

9
FDA/CMS Divergencies
9
  • FDA regulator public health/safety
  • Safe products
  • Assumes Market sorts out clinical value and
    comparative effectiveness
  • Standards vary by risk
  • CMS regulator purchaser
  • Improved health for good value
  • Increased focus on clinical benefits blur into
    public health effort
  • Decisions are broad, policy-based

Uncertainties How will CMS define and pay for
incremental benefit? How long will full coverage
of labeled indications take?
10
Evidence Development and Value
  • Technology Assessment
  • Evidence Based Medicine
  • Coverage with Evidence Requirements
  • Practice Based Management
  • Pay for Performance
  • Quality Outcomes
  • Outcomes Assessment
  • Cost-Effectiveness Analsyis
  • Outcomes Demonstration Projects
  • Overuse, Underuse, Misuse
  • Superior Medical outcomes
  • Least Costly Alternative
  • Substantial Equivalence
  • Comparative Effectiveness

11
Type of data you collect depends on the category
of product
Similar to Another Product Expansion of Existing Technology Truly New and Innovative
Evidence Required Usually FDA approval with same indications suffice for inclusion in existing coverage Publication of Controlled Studies (usually 1-2) Coverage under Protocol Publication of 2 4 RCTs with ongoing study through Registry Data, Cost-Effectiveness Data
Evidence Should Prove Similar clinical efect and outcomes, cost-efficacy a plus for differentiation Incremental clinical and / or economic value of the device relative to its predicate Higher degree of certainty. RCTs show improved outcomes over other treatments, with lower costs
Clinical Trial Data Types Necessary/ Optional Regulatory approval, Practical clinical trial, limited cost study RCTs, Cost-effectiveness, Long-term outcomes, Ongoing Practical Clinical Trials RCTs, Cost-effectiveness, Long-term outcomes, Practical Clinical Trial, Post-market registry
12
  • Payment Misalignments and determining Value

13
Medicares Complex Reimbursement Processes
13
  • Each payment system has its own rules, based in
    statute, and uses data from the providers it pays
  • Different payments in different sites for the
    same items or services
  • Can create inappropriate incentives
  • Providers learn to balance underpaid/overpaid
    services to achieve bottom-line
  • Benefits of less invasive services, migration to
    less costly settings, not recognized in value
    calculations

14
Major CMS Payment Systems
14
  • PROSPECTIVE PAYMENT SYSTEMS
  • Inpatient PPS
  • Outpatient PPS
  • Inpatient Rehab
  • Long-term Care Hospital
  • Inpatient Psych
  • Skilled Nursing Facility
  • Home Health
  • FEE SCHEDULES
  • Physicians
  • Ambulatory Surgical Centers
  • Clinical Labs
  • Durable Medical Equipment, Prosthetics
    Orthotics
  • Ambulance
  • ESRD

15
Example of Payment Divergences
15
Diagnostic Colonoscopy CPT 45378 1.15 million
procedures performed in 2003
  • Payment Site Utilization
  • OPPS 513 56
  • ASC 446 22
  • PFS-PE 177 6

physician fee schedule (PFS) practice expense (PE)
16
Home Hemodialysis provides great value providers
limit adoption
  • Major clinical benefits
  • LVH, heart failure improvement
  • Anemia
  • Rehabilitation/QOL
  • 15-25 annual savings potential (10-17K of 70K
    costs)
  • Kaiser promoting home dialysis

VS.
17
Daily home dialysis challenges
Largest savings in hospital costs, which are part
of a different budget (Part A vs. Part B) and are
not realized by the dialysis provider
18
  • Risks

19
Consider Unique technology-specific issues
  • Risk should the level of evidence be the same
    for a new MRI test as for a new brain aneurysm
    stent?
  • Operator Skill How does one design the impact
    of physician end-user skills on patient outcomes
    and study design?
  • Life Cycles How do we expect to use traditional
    study approaches with minimum of 3 years from
    start to pubs when technology changes within a 2
    years?
  • Combinatorial science How does the study
    account for the manufacturing changes (polymers,
    voltages, wires and metals, drugs) on the effect
    of patient outcomes?
  • Physician end-user involvement How are
    physicians mobilizing to determine the outcomes
    critical to study to determine value?

20
Drug RisksNear-Term Fatalities Per Person-Year
21
Transportation
22
Solution 1 Value
  • New Study Paradigm. Encourage access, innovation
  • Risk-based stratification of evidence
  • Physician end-user involvement
  • Focus on treatment comparisons rather than
    individual product comparisons
  • Electronic records, and HIT advances invest in
    this infrastructure.
  • Gold standard, database, epidemiological studies
  • Bayesian analysis preexisting data are
    constantly adjusted using new data as acured
    potential reduction of sample sizes, and ability
    to continually update probability of success or
    failure.
  • Collaborate with NIH, AHRQ, Private, public
    entities.
  • Global interactions and use of data

23
Solution 2 Reward the Future
  • Reward preventative services and interventions
    that can clearly demonstrate a significant value
    over existing products.
  • Integrate nanotechnology, IT, molecular
    diagnostics and combination therapies
    (drugs/devices) into existing payment schemas.
  • Evaluate new medical technologies at CMS through
    the Council of Medical Technology and Innovation
    adapt payment mechanisms.
  • Use an episode of care as a reward technology
    that moves from acute to home setttings (works in
    Kaiser-like systems where physician payment is
    not linked to utilization providers and payers
    are aligned)
  • Include physician payments and incentives in the
    episode of care.
  • PREEMPTIVE, PREDICTIVE, PERSONALIZED, and
    PARTICIPATIVE

24
Solution 3 Value includes Risk
  • Avoid the temptation to regulate when events
    occur before the technology is tested thoroughly.
  • Partner with industry and medicine on improved
    methods to accurately measure risk.
  • Use FDA-critical path initiatives as model.

25
  • Progress in the leading technology of our time
    has been so dramatic that it has brought about,
    time and again, swift qualitative changes in the
    material world around us, change that surely
    cannot be expressed simply as variations in
    prices or quanities.
  • Trajtenberg, Economist, 1990.

26
www.neocuregroup.com Founder President Randel
E. Richner, BSN, MPH 508-655-6161 ?
Richner_at_neocuregroup.com
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